Interviewing a New Tenant? It’s Trickier Than You Think

Seattle recently overturned its “first-in-time” mandate, which required landlords to accept the very first rental applicant who met their basic qualifications. The law, which was originally written to help avoid discrimination, received widespread attention as landlords lost several tenant-screening rights, including the ability to screen for criminal records. Just last month, the law was ruled a violation of the state constitution in Washington regarding a property-rights provision.

Anyone who manages or owns investment properties knows that navigating tenant rights can be a sensitive business. Screening applicants is no different. It’s one of the most important steps landlord can take to protect their properties. You probably have some clear qualifications in mind to evaluate prospective renters, but you must also ensure that you are in compliance with regulations and laws, both at national and state levels. The Fair Housing Act was created to make sure all applicants are treated equally, so it is important to familiarize yourself with some of its points.

Sometimes it can be difficult to navigate this process. It can be helpful to have clear guidelines to keep in mind. Here’s a short list of things to remember when it comes to tenant screening.Here Are Some Things You Can Ask About:

Income and employment. Making sure that they have adequate and reliable means to pay rent on time. Ask your applicants to provide pay-stubs and employer phone numbers so you can verify their employment status. Some property managers use the 30 percent rule, where at minimum the monthly rent must amount to no more than 30 percent of the tenant’s monthly income.
Number of occupants. It’s reasonable for you to want to know how many people will be living in a rental house and even to require all tenants over 18 to be part of the lease. Landlords must follow occupancy guidelines and should check with state rules on the maximum number of people allowed in a rental home.
Credit check approval. Property managers and landlord are allowed to run credit checks for tenant screening purposes only, but they have to get approval first. Make sure your application includes a section that acquires an applicant’s permission to run a credit and background check.
Eviction history. Prior evictions can be symptoms of problematic behavior. Tennant with priors should be avoided. Asking your applicants directly about past evictions gives them an opportunity to explain the situation. Online tenant-screening services let landlords check eviction reports and will expose the truth if your applicant lies.

Here Are Some Topics You Need to Avoid:

Questions that violate the Fair Housing Act. To protect tenants, landlords and property managers cannot ask rental applicants questions about race, religion, familial status, national origin, sex, or age. Double check the Act if you have questions.
Marital and parental status. Under the Fair Housing Act, landlords cannot ask tenants about familial status, including if they are married or have kids. This topic is tricky because asking about children and family is an easy conversation topic, but you must be careful as a landlord because it can be a serious violation of your tenant’s rights.
Arrest record. Don’t ask if a potential tenant has ever been arrested; it is considered illegal by HUD to use arrest records for tenant screening purposes. There is a big difference between getting arrested and getting convicted of a crime. Tenant-screening software lets landlords run a criminal background check that will inform you of your applicant’s legal violations on state, national, and county levels. Make sure to check your state’s laws against rejecting an applicant based on past criminal behavior.
Haphazard background checks. Make sure you screen all your tenants with the same process. If you only run background or credit checks on applicants that you feel look unkempt or irresponsible, you may be demonstrating discriminatory behavior. To protect yourself against discrimination accusations, set the same standards for every applicant, and screen every prospective tenant the same way.

While Washington State’s Superior Court may have ruled that choosing a tenant “is a fundamental attribute of property ownership,” much has not changed when it comes to sweeping regulations surrounding tenant screening. Property managers and landlords must follow state and national guidelines during tenant interviews, and balance finding the most qualified prospects and avoiding issues of discrimination. Keep the above tips in mind. Check your local regulations, and always perform a detailed tenant background and credit check to find out if your applicant has responsible financial tendencies and respects the law.

Do you have any tips for interviewing a tenant?

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.